Steve chairs global cannabis law firm Hoban Law Group's Pennsylvania and New Practice and Financial Services Group. With 14 offices and 441 lawyers, Hoban Law Group is only practice 100% devoted to cannabis and hemp law. Admitted to practice in Pennsylvania and New Jersey, Steve represents entities, governments and individuals in choosing a structure, preparing and submitting license application, regulation, compliance and litigation, and drafting legislation. A nationally recognized banking and cannabis law expert, Steve is a The Legal Intelligencer, New Jersey Law Journal, and Cannabis Business Executive columnist, and serves as a court appointed judge pro tempore and arbitrator.

[00:00:01] You're listening to thinking outside the bud where we speak with entrepreneurs investors thought leaders researchers advocates and policymakers who are finding new and exciting ways for cannabis to positively impact business society and culture. And now here is your host Business Coach Bruce Eckfeldt.

[00:00:30] And everyone this is thinking outside the byde I'm Bruce I hope I'm your host today we're here with Steve Shay and Steve is with Hobin Law Group out of Pennsylvania. He's with the new practice and financial services group Hobin is one of the few or maybe the only law firm specifically dedicated and focused on cannabis and so pleasure to have you on. Steve welcome to the program.

[00:00:52] It's great being here. Bruce thank you.

[00:00:54] And so what I like to kind of start having guests tell us a little bit about themselves a little bit about the professional background and how they got into Canada. So give us give us the background. How did you how did you start.

[00:01:07] Well I was kidnapers I was kidnapped from a thriving banking law by reputable practice and somehow they got me into this marijuana don't ask you know how it's not a banking attorney.

[00:01:18] I've been dealing with financial services and banking for a long time practicing law 29 years at the bar and banking and cash management a huge issue of legalized marijuana. So as things changed banking in America changed very much in 2010 with the passage of the Dodd Frank Act.

[00:01:37] So that changed things a consolidated brick and mortar banking is dying. Last year twenty six hundred branches of banks closed. Now that regional banks and the branches of the banks because there's less and less need for it so banks consolidate. So it was time to bring my skill set somewhere else and I guess marijuana got lucky.

[00:02:01] Besides when did you start working on the marijuana. Focus on the cannabis focus. Helen.

[00:02:07] We've got to come to you know a measurement here because every year in legalized marijuana is like seven years and every other industry.

[00:02:14] So I first started practicing and legalized marijuana about three and a half years ago.

[00:02:19] And what when you started what were the big issues and what were you focused on in terms of actually the Legal Services you were providing in taking them.

[00:02:27] The main thing and legalized marijuana is sort of deflating expectations. Marijuana is absolutely filled with malarkey. And one of the great saints in the industry and one of the sayings is where there's gold and there are hills start selling picks and shovels and as I say when you say you're marijuana Czerny you could fill your days just talking on the phone to people and answering questions because they think it's impossible to lose money in legalized marijuana when in fact the opposite is true most legalized marijuana businesses actually fail. So when I got started in it there are really two aspects to legalize marijuana. There's what's called plant touching and non-plan touching a plant touching sites people who want to grow process sell or transport marijuana from a non-plan touching side. It's a range of stuff. My particular expertise is in what's called financial services. So everybody thought they had a better light bulb. They're going to create a way that you can handle what we call either operational cash or legacy cash operational cash is the money that's coming across the counter and dispensaries today. That marijuana is primarily a 100 percent cash business legacy cash is a little more interesting legacy Tasha's the cash that are buried under a porch somewhere in shall we say Humboldt County California but somebody forgot to pay the 85 percent effective tax rate we have on marijuana and marijuana suffers 85 percent effective tax rate on dispense red. So that sort of stuff people find a way to essentially what are they going to do with obviously farm financial services. So I get calls from people initially both trying to find some ways to either deposit their cash or people who said I have prepaid cards. Our bank wants to do this. We have some form of electronic crypto currency. We have some other solution and just hope from where I'm at. I wasn't kidding when I said before that it legalized marijuana each year is like seven years in history.

[00:04:24] So as we speak today 30 or 31 states the District of Columbia.

[00:04:29] And they come along from Guam and Puerto Rico have some form of legalized marijuana wasn't that way. Three and a half years ago and facts and a half years ago the real hotspot believe out was Puerto Rico. Everybody wanted to have an enterprise in Puerto Rico because to have a very favorable tax structure. And it was believed that reciprocity within a big deal meaning that because so key states had legalized marijuana programs. If you had a card from California you could go down to Puerto Rico sort of the sort of couple of years things change Maryland Puerto Rico's economy and a terrible troubled state had weather and other issues down there has changed that and make it not quite the epicenter of legalized marijuana.

[00:05:08] Yes. So let's just unpack just briefly for those people that are super familiar with the sort of them the regulation the losses from the financial side.

[00:05:17] Is it useful to characterize this as the plane touching a non-plan touching is that a big distinction for you in terms of how the stuff. Yes. So it's touching if you're touching business. What is coming into play or why do you have these kind of financial regulation law issues in terms of operating your practice selling your business.

[00:05:36] Not a problem. We call this the waterfall we're going it on the waterfall. Bruce SASO the top of the waterfall. We have what's called a controlled substance at the Controlled Substance Act says that it is one hundred per cent illegal under federal law to grow process so transport or possess marijuana. Does it go a little further down the waterfall.

[00:05:57] We encounter a body of law called the Bank Secrecy Act. The Bank Secrecy Act is concerned really with money laundering and because anything that is 100 percent violated federal law any cash generated. Theoretically if Armah dispensary which is a plant touching enterprise and deposit a check for twelve dollars that I receive from their cash for 12 dollars. I am doing money laundering. I'm trying to take illegal money. Under federal law and deposit illegal thing. So as a result of that it became a very complex situation. Marijuana has been a cash business and is still a cash business for a lot of reasons number one. Honestly people do want to pay taxes and they were trying to paying cash to avoid that paid everybody else in cash. But secondly banks didn't want to do it even though the laws of 30 states edition of Columbia have come on to Guam Puerto Rico have some form of legalized marijuana still 100 percent illegal under federal law. And then in 2014 what was called the sane guidance was issued and the and guidance is really comes from the Treasury Department the Financial Crimes Enforcement Network. What they said is OK there's there's a breathtaking amount of cash out there.

[00:07:11] We're not going to say whether it's legal or not. But you the bank now the marijuana related businesses and for the purposes the rest of our talk today let's just call anybody who has a plan touching enterprise whether to grow process sell or transport marijuana under a plan touching company called the marijuana related businesses and it sends send guidance to the banks which will call financial institutions financial institutions. We're not saying this is legal or not but if you observe these guidelines you have less of a chance of breaking the law but the chance of being prosecuted. So the Finstad guidance is divided into two things. One thing is a series of due diligence steps a financial institution has to take before they start banking a marijuana related business. The second aspect of that are what are called the Saros reports. With every deposit or withdrawal financial institution has to file a report with the Treasury which stands for suspicious activity report. So in doing that there's three types of stars. One is for any deposit or withdrawal from a marijuana related business bank account.

[00:08:17] Number two is if there's anything fishy if you seeing with what is deemed suspicious activity that's another sorrow's report that Azzurri filed.

[00:08:25] And the third thing is called a termination report. If somebody pulls away and closes an account that you turns out marijuana related business you have to file that report now from the bank's point of view. Just just a one of one of the really so interesting I saw Speaker awhile back and he said something which I think was probably the greatest Sampford and legalized marijuana. He said that everybody I meet wants to be in the cannabis business. In truth they want to be in cannabis. I want to stay in business. That's the problem. Legalized marijuana. People thought that the illegal practices would be accepted that it was OK. Now it's legal. Go right ahead. And that's not true. With the increasing legalization by state and hopefully God willing federally you're going to have to conform to all the other laws that are out there. So if anybody wants a bank account or wants to hold onto their bank account that's a whole nother issue has Baskett people. You have to start thinking like a banker.

[00:09:22] Here's how a banker thinks a banker is only interested in two things. Number one profitability. Number two risk. They can manage.

[00:09:31] Banks are not afraid of risk. Banking is based on risk. If you look back to the subprime mortgage lending in America not that long ago the whole notion of it is that we higher interest rate for riskier borrowers. So banks are fine with risk. But you've got to be able to manage it and legalize marijuana. The compliance with the fence setting guidelines is very very expensive. So now banks that exist there plus or minus llamo Whero 43 or 44 banks at the moment providing financial services to marijuana related businesses most some charge at least five thousand dollars per month per account is that they're offsetting their operational costs for the bed to actually have these accounts through just through the fees or the account fee or are they charging other attendant percentages in other ways. Well it depends on how you want to look at it. I look to the biggest bank in legalized marijuana today and its partners credit partners Colorado a credit union Safe Harbor and they do have the marijuana banking an entire state of Colorado which last year did at one point five billion dollars in gross sales last year. Eighty five million dollars per month came through safe harbor. So they have 12 or 13 employees that full time job is doing all with due diligence and this our reporting. And for better or for worse. I happen to find the marijuana industry delightful and charming but I'm not running a bank.

[00:10:52] And people who are shall we say flamboyant don't always dot the i's and crossing the t's. Which brings us back to the second aspect of risk you can manage and a bank has to go in there and make very sure. Now we're not going to talk about it today but there is an Roxann an 85 percent onerous tax rate the tax rate on legalized marijuana enterprises. That phrase is so ridiculous. I'm going to say it again. If you run a dispensary there's a strong possibility of an 85 percent effective tax rate as a result of that. There are a lot of businesses that we're in let's say three different markets. There's a market in which I work which is the white market. My clients are transparent compliant with the laws and hopefully profitable. There's a black market that's pretty easy. They're the opposite. They're doing whatever the hell they want to do. They're growing marijuana illegally they're selling it illegally and they're not paying tax. And that's fairly easy to assess that risk. Is not easy to measure is what's called the gray market. And we saw a lot of people start marijuana related businesses. They got to go and they actually realized oh my god I'm paying that's how I can pay my utilities my employees little interesting side note here because marijuana is 100 percent illegal under federal law.

[00:12:11] You can't file bankruptcy.

[00:12:13] Some people yeah. People who got license to grow processed cell and transport marijuana. All of a sudden said What the hell have I done. I now have a huge tax liability. I can't discharge it in bankruptcy. I'm going to lose everything I get none of the protections. As a result we saw a lot of people who sold legally through the front door. I mean they sold illegally through the back door. And that's what's called the Graemes. They will keep two sets of books. So if you're a financial institution and you know you've got to really worry about that sort of thing you're going to deal with it. And how do you assess that risk. Frequently the banks would come in there and discover all kinds of discrepancies. What's really interesting is that the discrepancies the public figures don't really happen. The real issues are what every small business does. Small businesses often make loans to themselves and don't adequately document that. Small businesses often fail to adequately comply with corporate formalities in terms of having meetings have been placers nonstop. Yeah all that stuff that's failed some marijuana related business from a banking point of view because they have to justify your existence. So Vincent issued a report as it does every quarter. I think the last report was at the end of the third quarter second quarter 2000 and 18 and they said there are 414 banks in America that filed Sardis report.

[00:13:36] But that doesn't mean there 414 banks that are willingly doing marijuana related banking. Instead here's what we got. There's four types of banks that filed Starr's report Shinkai number one pardners Colorado credit union bank I certainly would have been out there doing this surcharge and their fees. They're doing it now serving our industry. Number two the one off the one off is the bank that's doing it for the really big client. When Mr. Rockefeller came to the bank and said hey listen my nephew's getting into the don't trade if you don't give him a bank account I'm pulling out my 5 billion dollars. They said OK we'll do it for you Mr. Rockefeller for nobody else. The third kind of bank that Sarge are the ones that are shocked. Johnson stealthier and some of that that's not come. Because when people open bank accounts they often say general health and wellness wore when they open the bank account their pre license and actually are not a marijuana business yet more often than not. I think it's a disconnect between the people who are on the front end who say I get compensated for every time I open it's a C level executives say no. So Wells Fargo was shocked to learn they had 17000 accounts for it.

[00:14:50] Wow.

[00:14:50] Bank that Barbara Starr's report is the kind of bank that used to provide financial services to marijuana related businesses and a bellwether there is Las Vegas. After Colorado which is the biggest in California and California is where the industry's going to end up having the marijuana that's consumed in America is consumed in California up largest economy in the world. But after Colorado and California the next biggest market as I see is Nevada and Nevada is virtually impossible to find the bank. There was a bank there called Kirkwood Kirkwood closed because it could make a profit doing. The key now closed before dual use came the key to making a profit for banks point of view because economies of scale. I'm calling you from beautiful Philadelphia Pennsylvania and I know we only have 37 marijuana related businesses in Philadelphia Pennsylvania and are spread across the entire commonwealth. So if you want a bank let's say one bank did all the banking fraud 37 which is possible they have to physically get all the cash somehow somewhere which has its own problems. And once that's done you know you're talking about a total of 37 clients. That's really not a lot. Yeah. Marijuana and the banking purposes would be sort of hard to justify keeping people employed just for a thumb up plant touching business.

[00:16:04] I really need your parent to work with Métayer understand the regulation they're reporting that they have to do to be able to you know properly can a and report like you and I need to be an understanding of the fees they're charging. I need to be understanding of the data and the information they need and access to my business and my books if I'm going to have a healthy banking relationship.

[00:16:25] Yes but there's so much more to it. So we have a young growing industry that's seeking help from a dying industry brick and mortar bank is dying as a result of the passage in 2010 of the Dodd Frank Act which in itself has plus or minus twenty seven thousand pages of regulations. It's very hard for banks to comply. There's a saying in financial services and it's going to sound funny to people legalize marijuana. The Financial Services they say any bank that has less than a billion dollars in assets is a zombie bank. Now billion dollars in assets. Sounds like a lot and it is a lot of money but it's not like they're just sitting in a room. But the fact of the matter is the costs of complying with all this stuff is so expensive you have to the economies of scale brick and mortar banking is dying and there's two levels of banking. There's federal and state chartered bank banks like Bank of America Wells Fargo are strong. They're not in trouble.

[00:17:22] Smaller community banks that have 85 million dollars in assets are very weak.

[00:17:27] So all those banks there many of those banks are really preying. Can I be acquired. Can I merge can I do stuff like Bacho try that they don't really know what the future holds. A lot of them think marijuana may be the answer for them and it may be. But you have to be in the right place like California Colorado Oregon. Anyway those banks are scared that they just don't know what to do. So when you're dealing with those people you have to realize that number one.

[00:17:55] Believe it or not they actually kind of were you there. You were giving them your money and they're getting interest. So they have a vested interest to you. Number two how do you make their job easier. Quick story. QUIEN in Colorado.

[00:18:07] Very dear client of my firm and again my firm is the Hobin Law Group. We're definitely before attorneys. You described us a little bit before I would say that we're the best of what we do. I said we're the only ones who do what we do. We are forging offices across the globe. We're centered in Denver Colorado where marijuana is centered but we have an office in Anchorage Alaska in Boca Raton and Kentucky it's Chicago Texas Ira and P.A. and Jersey. We've got your boss that we've got Kiev Ukraine. We're the only ones who what we do know is a longstanding client Colorado. And he told me he goes we're staying I'm a bank with the same bank three years three years and he goes. They kick me out the other day and I go why he goes Well I went there and they go call Mr. Santigold Mr. Smith your money stinks and he goes right but you know what I did. Been growing processing selling marijuana for three years.

[00:19:00] And they said no no your money smells money made up top absorbs the smell. And for some reason this quiet kept to the bank. There's something when you remove the good stuff from marijuana. So it's often called poop chute believe it or not and that smell permeated the commonplace stench and abandoned the people. How does it work.

[00:19:24] Well Heidi I don't know this is true but it is just physically. No man. Maybe he wouldn't have to go the rigmarole of losing a bike. So you have to understand the pain of the people if you want financial services what they're dealing with will make their lives easy. If you're presenting them are you freezing on cash how many deposits how easy to deal with that that kind of stuff basic stuff. The basic rules of running a business are no different and marijuana if you like your venue you're going to take care of them and I'm going to take care of you.

[00:19:55] And I think that's really the kind of the way this is. You know it's got to be a business relationship a productive business relationship for both sides understanding what their needs are or their situation. Helping them make their job easier. And whatever you can do to if you're not touching a business.

[00:20:11] How does all this affect it does it affect you. If so what do I need to think about if I'm not touching the plan but I'm still dealing in the market. What ends up happening.

[00:20:19] And that's a really good question. So we have to expand the definition and this is something that can go well beyond our half hour. But we've been talking now about an actual services strictly defined as a depository account with a bank putting lots of money but there's other issues too. There are loans which is banks are able to do that is also what are called Merchant Services where you were able to buy stuff with a credit card. Now I'm going to achieve a little bit here. I'm going to expand the definition of what we're doing up to this point. All we've been talking about is legalized marijuana and our industry is so much greater. We're really talking about cannabis and that involves what we call hemp just for purposes of definition preplan to Endicott sativa Rueter Ahlus if you extract stuff from mature stems and stalks and the less than 3 percent THC that's Roulettes a definition. As of today of ham and ham comes in two forms it has oil based and fibrous soil based it is health and wellness. It has beauty is food additive applications on the fiber side. Well that's industrial feed and ham create that kind of stuff. So right now the biggest issue really merchant sir is Merchant Services for ham derived products. Why do I say that. There's a phrase out there for CBD and I'm not sure why I did for a living.

[00:21:39] It's not if you look at any oil based hemp derived product it's full spectrum nobody cares if you have the magic lathers CBD on a bottle Oh it's going to cure all your woes. It's good to make a young again. It can help you sleep but I guess that's the perception so most of that stuff sold over the Internet and although there's a lot of her story is a lot of really great products are sold that way. And to do that you do get a credit card processor deal with that. So when you have a merchant services provider they have to have a bank account.

[00:22:10] So theoretically under this very broad definition we could say although I'm not saying this but if you think that it falls in the definition of marijuana I do not. There's a division of authority there. You would say OK the people who grow process and sell the house and their plant touching. What about the guy providing Merchant Services. Well that's very hard to find. Merchant Services for hemp derived products very reluctant to do it changing the discussion just just tweaking a little bit.

[00:22:38] We saw very very very disturbing guidance from the small business administration in April. The SBA has certain loans basically fusion is it the SBA is issuing the loans with small business administration does not issue the loans but they insure loans by certain member banks.

[00:22:56] So let's say Bank of America qualifies for the SBA program. They can issue loans to people. And the SBA insures or guarantees loans. OK. The SBA part of the guidance that SBA loans couldn't be used for anyone growing processing or selling marijuana. Number one. Number two anyone growing processing or selling anywhere. And number three anybody deriving any income whatsoever from the sale of marijuana. And in a special section in that guidance which carved out landlords if you're a commercial but theoretically since all of my income pretty much are large proportion comes from supported I would not qualify for an SBA loan. And I was in the process of the problem I have with this and I have a hell of a lot of problems with it is that if you look at the history of the SBA loans where they intended for small businesses that are unowned women owned minority owned businesses. And that's a disproportionate hopefully hopefully in a large percentage that will legalize marijuana industrial hemp. So the SBA took a really awful position. So theoretically if you provide a better word to interior design work and you go repair the shelves of the dispensaries they could pull your SBA loan.

[00:24:10] Wow. And what do you think. I mean said why why make that clarification. Why did they do that.

[00:24:16] What was their protection as they're trying to not get into federal issues with this money. Well I don't understand their thinking.

[00:24:24] Everybody has a different definition. The great thing about legalized marijuana is everybody is a genius. A legalizing marijuana didn't have it all figured out. I'm going to go with a traditional lawyers point of view which is just sloppy.

[00:24:37] I think a lot of different laws out there people don't understand them and they don't match up for example the Controlled Substance Act is a piece of federal legislation. The farm goes a piece of federal legislation. The Controlled Substance Act is enforced by the regulator by an agency called the Drug Enforcement Agency. The farm bill is by the Department of Agriculture the Drug Enforcement Agency has a definition of marijuana but so intensely broad that some people might think that industrial hemp fits in there.

[00:25:06] The Department of Agriculture has a very clear definition of industrial hemp which which one rules. This is different now because my firm Hobin Law Group in the Ninth Circuit Court of Appeals and a case last June are Kanker or may we establish the precedent that when in doubt the hornbill definition of hand governs not the DEA.

[00:25:26] That didn't help me out though because earlier that month I got a hundred grand worth of hemp derived product sitting in a post office in Pennsylvania and a postal inspector an in-house counsel for the United States Postal Service said we're required to follow the DA's definition of a boss. The DA's definition is literally a box they ripped open a box on a random search bounced up on there and bought it was marriage you wanna or something like that about it. And they go the D.A. says if the person you're not writing for the farm bill but honestly those guys the people who enforce our laws get paid the same whether they work hard or not. It's awfully hard to break a sweat when you're leaving you know leaving the office for 20 parts which is what's happening here. Suddenly people me ask this you know small business association said OK now we're going to furnish three illegalize have been legalized marijuana industrial hemp industries. I still want to do some quick and dirty and get out of the office.

[00:26:22] I think honestly that's happening a lot in various aspects of the industry but it's not clear and there is pantos you know that takes work and energy and digging to actually figure out how we're going to navigate some of these things. You know it's not it's not consistent and it hasn't been thought out unfortunately.

[00:26:38] You know the way it ends up getting thought out or resolved is oftentimes in a court or in some kind of know policy.

[00:26:44] Is a process and you don't know you don't know until it actually gets tested and actually goes to that level before you know which way it's going to fall.

[00:26:50] I would assume even a deeper thing to do although I strongly suspect most of the people at the state federal and local government don't want to work hard. They do want to work so I think that the Drug Enforcement Agency really wants to hold jurisdiction that because employs more people and they employ more people they can get a larger part of the budget they're going to have more resources. So you think you're seeing a war an interagency war between the DEA and the Department of Agriculture at a turf war we are the central government as one monolith.

[00:27:22] It's just not true.

[00:27:24] So absolutely league is going to have internal dynamics internal fighting. Yes.

[00:27:28] We'll see how the battle is going to play out but I think you're right.

[00:27:32] I think you know be understanding that this is not one central government with one mind as consistent that you're going to have these differences and dilemmas and discrepancies over time.

[00:27:43] So let's talk a little bit about this we got a couple minutes here. Let's talk a little bit about cryptocurrency because I know I know it's something that you mentioned earlier.

[00:27:50] And I think that it's a fascinating kind of a left turn on some of this stuff.

[00:27:55] How does the currency kind of shake shake up some of the industry where you're seeing it being applied. Where do you think it's going to going to have some traction and in the end Canibus and him explain it a little bit for us.

[00:28:07] I will to give an apology first. I truly wish my wing man is here. My name is Kevin important important runs the intellectual property department of our law firm and we have totally different points of view on this song.

[00:28:18] I didn't state Kevin's played well smarter than I am. I can't see his point of view but it's kind of a Hatfield and McCoy approach. So the McCoys I guess. I think from two points of view as a veteran financial services attorney and as a presently legalized marijuana thing I have mixed feelings about it. The fact of the matter is I have a sentimental attachment to brick and mortar bank and I want it to exist and employs a lot of Americans. I think it's a very good system presently but I think cryptocurrency is inevitable. I don't like it for our industry. So let me explain why but then I'll back into it. Turns out there's two aspects that electronic or crypto currency will have for our industry one of which is a store of value just service currency. The second which is to help out funding and that's two different aspects of cryptocurrency can be used as a method of exchange like money but also can be used to raise funds in a manner that slots swifter and a lot of a lot less complicated for companies.

[00:29:19] That's called an initial coining offering we'll call it an. Kind of like an IPO. OK. Why don't I like it legalized marijuana and industrial hemp. The future of my industry is threefold. It's got to be transparent. It's got to be compliant and it's got to be profitable. And the antecedents of cryptocurrency was not to have transparency. Why. Why is that cryptocurrency which is just a store of value will be the same thing as me going and saying OK I'm going to create a factory I'm going agree to manufacture thousands skittles and Skittles will have so much value and I will say that I will buy even your luxurious house spruce for and Skittles. And we agree upon that and then we record that on a ledger the electronic Ledger called a block chain and it could be updated all that such wonderful and provides enormous transparency as to the transaction not to the parties. Yeah that's why I don't like it. We talked about earlier was about the difference between operational cash and legacy cash. And clearly I don't think you need help connecting the dots. Because my phone is wrong saying OK I got a half million dollars. Don't ask me where I don't get any currency and get it out of people. If you put yourself in that situation and next to those people nothing good is going to happen. Number two unfortunately as I said before that I want to be in the cannabis business. I just don't want to be in cannabis and go quick and cut corners. Initial cornering offerings are a wonderful idea.

[00:30:51] They are going to work. The problem is they don't work. Presently one in four work only one and for an initial coin offerings fundraises actually succeed. God help me with the figures. Legalize marijuana for all industries were not exactly known for our penmanship and legalized marijuana. It's about parch not good. Back to the banking end of it. You know you talk about brick and mortar banks and what value it's insured. The money is insured and that's a real issue. Part of part of the operation of business is perception and knowing that you have a quarter million dollars sitting in the credit union of Humboldt County that's insured. That's great if you have it in crypto currency it's not insured if something happens and you know proponents of crypto currency would argue it's safer. I don't think it is only it's a safer. I think that we're going to have fewer incidents of disruption but incidents that exist will be of much greater magnitude. So I really don't think. And also it's not regulated you know haha. Hi everybody makes fun of the government I guess you have to have some degree of errors but without regulation what's going to happen. Zero regulation on cryptocurrency. So I don't think that's great for our industry.

[00:32:03] There's another issue too which is tax cuts a taxable event. We represent our role. There is a a couple of managed to cryptocurrency on the business to consumer level. Well there's one I know we have a quite a bulk subset to 20 forms of crypto currency move dysfunctionally and there is a value to that because if you convert your money to cryptocurrency which is electronic and you then take it to a thing you have much less chance of being robbed. So there is a big issue in the cash management of the safety of the consumers the safety of the people work in the industry off. But it's an operational nightmare. They take 28 different forms of crypto currency and there's a real issue. This is kind of inside baseball. You know there's a real issue of what's a taxable event. Bruce if you had a dispensary and I went in there and I bought the classic 147 dollars worth X the Krasik number and see marijuana 147 dollars were the products I'd give you the money that sat. But what if I gave you 147 dollars in crypto currency and it surged in value. This country would have a taxable bond. Further would have it dropped in value.

[00:33:08] You'd also have a taxable about make sure bookie main operations more complicated. Yes there is of Dennet there. There is a value to it to one value I'll see. Here's an example. I had a client here in Pennsylvania who had a large piece farm machinery action over what it was and he wanted to sell it to somebody in California. Very nice. The person in California wanted to pay for it in cash is banks here in Pennsylvania. Let's say it's Bank of America it wasn't it let's say it's Bank of America. Looked up the guy who on the said I'm going to come next week with 250000 dollars in cash or better so it's going to be deposited in California. Some guy is going to drive up in a pickup truck with 250 Greg Norman you deposit my house. The bank did its due diligence and said well we looked up this guy. Apparently his license to grow process and sell marijuana. So no you can't do that now. Query for a moment how connected those dots. It's several enterprises. We don't know where the cash really came from the bank just sort of prejudicially said whatever it must be from them when you're in this situation.

[00:34:12] If that gentleman could have reduced to the crypto currency and a crypto currency could it would have facilitated that transaction a lot more easily. I believe.

[00:34:22] Yes a little interesting developments and I think that this is one of the fascinating things about this industry is that there's a lot of innovation but there's a lot of things that still are getting kind of prevented worked out.

[00:34:31] Steve This has been great. We're kind of at time but I think we've got a lot of different threads going on here. If people want to find out more information either you know specifically about the things we talked about or were really about ethical questions associated with their business their plan touching or not what's the best way to get a hold of you and get more information.

[00:34:49] Sure maybe our law firm is the whole band H.O. be a long group and my email address is Steve at Hoback a job and law.

[00:35:00] Excellent. Thank you I know make sure that those are the show so that people can get old and you see. It's been a pleasure. I know let's keep in touch and I think we could probably do another episode and if you has some of this stuff works out. You know what my pleasure. So I appreciate the time. Naspers

[00:35:15] You've been listening to Thinking Outside the Bud with Business Coach Bruce Eckfeldt to find a full list of podcast episodes. Download the tools and worksheets and access other great content. Visit the Web site at thinkingoutsidethebud.com. And don't forget to sign up for the free newsletter at thinkingoutsidethebud.com/newsletter.